Amway Japan Ltd.

By: John A. Quelch and David J. Arnold and Yoshinori Fujikawa and Patrick Reinmoller

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Synopsis: In April 1997, the president of Amway Japan (AJL, Tokyo, Japan), pondered how to reverse the first performance decline the company has experienced since entering the Japanese direct selling market in 1979. Established as the tenth overseas subsidiary of Amway Corp. of Ada, Michigan, AJL had grown to become the most successful company with 1996 sales of Y212 billion ($1.9 billion), accounting for 30% of Amway's worldwide sales. Having succeeded in doubling AJL's sales during the five years of his presidency, the AJL president now needed to develop a strategy not only for rebuilding growth in the second half of FY 1997 but also for achieving AJL's long-term goal of sales of Y300 billion by FY 2000. AJL faced the following issues in 1997: 1) fluctuating distributor motivation, 2) growing dissatisfaction with Amway products, 3) increasing difficulty in controlling the distributor network, and 4) a changing market environment. AJL could enhance its sales growth by boosting sponsoring, retention, and/or productivity of its distributor membership. Strategic options for AJL included: 1) penetration growth, 2) productivity growth, or 3) both. The AJL president needed to come up with a clear strategic design based on a thorough analysis of the pros and cons of each strategic choice.